The Disproportionate Impact on Victims of Nazi-Looting by the D.C. Circuit’s Interpretation of the FSIA

While 70 years have passed since the end of WWII, heirs of persecuted victims of Nazi Germany are still litigating for the return of their property, and several recent claims have required naming foreign states as defendants.[1] It is vital these claimants be given every opportunity for justice. That is why the Supreme Court should grant a writ of certiorari to petitioners de Csepel, Herzog and Herzog and reverse the D.C. Circuit’s opinion in de Csepel v. Republic of Hungary.[2]

De Csepel will have a disproportionate impact on future expropriated property claims brought by private citizens against foreign states and agencies,[3] particularly those claims arising from the Nazi looting of private property during WWII.[4] Such future repatriation claims would likely seek to rely on the same statutorily-provided exception of the Foreign Sovereign Immunities Act (the “FSIA”) that petitioners cited to the D.C. Circuit in de Csepel, known as the “expropriated property exception,” which reads:

A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case . . . in which rights in property taken in violation of international law are in issue and . . . that property or any property exchanged for such property is owned or operated by an agency of instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States.[5]

The D.C. Circuit’s interpretation of the expropriated property exception grants private citizens only a limited right to bring civil suit against an agency of a foreign state—but not the state itself— when the property is not located within the borders of the U.S.[6]

Such a reading is inaccurate and has a far-reaching effect. The plain meaning of the provision’s language alone suggests this is an incorrect understanding of Congress’ intent, and the result is a gaping loophole that allows foreign states to merely pass stolen property to one of its agencies during litigation to avoid liability, while reacquiring it any time after proceedings have ended.[7]

This interpretation of the statute will have a detrimental impact on any private citizen alleging the taking of property by foreign organizations affiliated with a foreign government, a situation particularly prevalent in expropriated art claims arising out of Nazi-looting during WWII.[8] It is estimated the Nazi regime looted somewhere between twenty and thirty percent of all works of fine art in Europe at the start of the War, through force or coerced sale,[9] and approximately 100,000 of these works, worth billions of dollars, have not been recovered.[10] While some of the art has ended up in privately owned museums or family collections, many heirs are left fighting steep, uphill battles against nations such as Austria and Hungary who often refuse to give up the “national treasures” housed in their state-owned, public museums.[11]

While only the D.C. Circuit has adopted this erroneous interpretation of the expropriated property exception, other provisions of the FSIA fundamentally require all such claims to be heard there. Thus, the de Csepel decision will impact all future claims brought under the FSIA exemption, virtually depriving claimants of a U.S. judicial forum.[12] The disproportionate effect the D.C. Circuit’s holding has on future petitioners relying on the FSIA’s expropriated property exception to receive proper remedies for their injuries necessitates that the Supreme Court accept the de Csepel petition and reverse the D.C. Circuit decision.